1120S $0 income, can I deduct business expenses and file loss? Or include expenses in total cost/basis of the commercial building?

[caseyPham]

I bought a commercial parcel of land under a LLC elected to be Scorp.  Paid in cash $200K.  I paid $6828.53 in property taxes.  I also paid about $700 for liability insurance. Moreover, I also paid a yard guy to maintain the grass for about $130 a month. This parcel of land will be intended to build a commercial building in the next three years.  Can I claim any of them as business expenses and file loss while I'm waiting to build in Form 1120S? Or can I include these expenses in total cost/basis of the commercial building?

[qbteachmt]

Whew. "I bought a commercial parcel of land under a LLC elected to be Scorp."

That was the worst way to do this; I don't know where you got your guidance. You might want to get this corrected to LLC as either Disregarded Entity or, if you have partners, then 1065 entity.

It seems you are asking personal guidance and not preparing a Client's tax return, as well.

[caseyPham]

Actually it's a question from client, I just reposted to ask for ideas. May I ask why she needs to change to disregard entity or 1065?

[sjrcpa]

Never put real estate in a corporation.

Also most RE deals are structured so that someone gets more than their ownership % of cash distributions, income, etc. Can't do that in an S Corp.

[qbteachmt · Accepted solution]

S Corps require Payroll for the employees in this business for the work they perform. That's the first problem I like to point out.